The days of the Philippines being one of Asia's underachievers are looking to be a thing of the past, according to the country's finance secretary, Cesar Purisima. The secret to the island nation's success, he tells The Banker, is good governance and a president that the country can unite behind.
The reform agenda of the current president of the Philippines, Benigno Aquino III, has been credited for much of the improvement in the country’s economic outlook. The country’s finance secretary, Cesar Purisima, says that 40 years ago, the Philippines was identified by the World Bank as one of the economies most likely to succeed, along with Myanmar. “Fast-forward and we are not one of the most successful Asian economies – we are among the bottom? Why?” he asks.
On paper, the Philippines has a lot going for it – its population speaks English, it is in a favourable location, and its natural beauty lends itself to tourism – but the country has up until now lagged behind its Asian neighbours. To these criticisms of his country, Mr Purisima says: “You should not use the past as a predictor of the future.”
Good governance
Mr Purisima says that Mr Aquino identified governance as the main constraint on the Philippines' progress and ran on that platform. And since June 2010, he has been implementing ‘Aquinomics’, a policy that is framed by the belief that good governance is good economics.
Now into the third year of his term, Mr Purisima says that Mr Aquino’s actions are beginning to realise the country's potential, and the Philippines is already beginning to reap the benefits. “People now realise this government is serious,” says Mr Purisima, who adds that its policies are having a knock-on effect of pushing people to pay taxes. “Tax payments have increased,” he says.
Mr Purisima says that a key priority of the current administration has been putting the Philippines on a path to fiscal stability, which includes keeping the budget deficit within a target of 2% of the gross domestic product. “The reduction of the deficit created fiscal space and market confidence in the financial markets,” he says.
The Department of Budget and Management has also been cutting waste in government expenditure, for example in the planning of projects such as road construction. “Before, roads were just built with no consideration of a plan of the [transport] network, which did not achieve the objective of movement of goods and people. All the roads must [now] be connected to the masterplan,” he says.
Infrastructure improvement
Infrastructure is often cited as one of the weaknesses of the Philippines, but now a number of private-public partnership (PPP) infrastructure projects are under way. “PPP is not new for the Philippines – we have had a checkered experience. [Some of them posed] problems because they were unsolicited projects. The private party had done their homework and [the public sector party] had not. [The terms of the partnership] usually favour the one who does the proposal. Now we shy away from unsolicited projects – it is important that we do a feasibility study,” says Mr Purisima.
Another key goal in the Philippines is to improve the country's infrastructure so that the tourism industry can meet its goal of 10 million annual visitors by 2016. “In the past, vested interests prevented the opening up of the skies. Airlines can now fly in and out without reciprocity agreements. An increase in airlines is important if you want tourists to come in.”
President Aquino has not been afraid to take on opponents and challenge those with vested interests. In December 2012, despite the opposition of the Catholic church, he was able to sign the reproductive healthcare bill into law, which means that Filipinos will have access to government-funded contraception. “Whether rich or poor, you should have the education and access to determine what you want to do with your life,” says Mr Purisima.
So far, the president has been able to introduce a number of governance reforms. But could the progress made be reversed by the next administration? “Even beyond this term, Filipinos will expect better governance,” says Mr Purisima. “The approval rating of the president is unprecedented. His lowest levels are higher than the highest levels of previous presidents. The support of the people is there. We are operating in a new environment already. With the internet, every Filipino will have access to information – it is hard to fool them. The penetration rate of cell phones is 85%, [and with regards to the internet it] is very deep. It empowers people to know what is going on. Filipinos demand accountability and results from their political leaders. They will demand whoever succeeds the president to do the same.”
